Updated 12:16 am, Saturday, August 25, 2012

SHELTON -- A criminal investigation in City Hall is centering on the alleged misappropriation of at least $218,000 by Sharon Scanlon, the city's former assistant finance director, according to Finance Director Louis Marusic.

Marusic discovered the alleged misappropriation on July 25, he said. Marusic said he personally turned over documentation to the city's auditors "to verify" that amount. "She appeared to have committed fraud in that amount over a two-year period," Marusic said during an interview at his home Friday.

Scanlon oversaw the accounting and control section of the city's Finance Department, which handles accounts payable, Marusic said.

This, he said, includes processing vendor payments and grant money and handling the city's payroll accounts.

Scanlon, who held the job for the past 17 years, did not return several phone calls requesting comment Friday.

Marusic, who was placed on paid administrative leave Monday by Lauretti, would not say how Scanlon had allegedly misappropriated money. "I don't want to jeopardize the investigation," he said.

However, Marusic said sources close to the investigation tell him that amount is now "close to $320,000 over three years."

Lauretti announced Friday that a criminal probe is under way into the matter.

"The city of Shelton is currently investigating the theft of public funds in the Finance Department," Lauretti said in a written statement.

He said city auditors are assisting law enforcement personnel in the probe and that the city is also pursuing "various avenues to obtain full restitution."

Lauretti said that outside personnel have been put in place to provide oversight in the finance department in Marusic's absence.

Marusic, Lauretti said, is not a suspect.

Nevertheless, Marusic said, the mayor has been trying to force him to retire. "He told me it would be better to do that because the result of the criminal probe would be `a very bad reflection' on me."

But Marusic, finance director for the past 31 years, says he will "stay put" and continue to cooperate with law enforcement. "I am not part of the fraud. I uncovered [it] and turned it over to the auditors."

Lauretti could not be reached Friday for comment.

This is the latest in a series of incidents involving fraud in municipal offices in the Valley.

In recent weeks, Karen Guillet, the former Oxford tax collector, pleaded guilty to first-degree larceny for taking at least $243,902 in town funds; Bridget Bostic, Ansonia's tax collector was put on administrative leave after admitting to issuing DMV releases to city employees, and Katherine Kulhawik, a full-time Derby tax clerk, was suspended for allegedly mishandling cash payments.